270° View

With the new year upon us, many are thinking about what the next year might hold for the financial services industry. We wanted to share our predictions on how digital, AI, and personalization will transform the financial industry in 2019 and how banks and credit unions will aim to improve customer and member service with better digital features and analytics.

4 Reasons to Get Engaged in Data Driven Digital Relationships with Your Customers

Few organization hold more data about their customers than financial institutions. Banks and credit unions know where their customers and members live, how much money they make, what their net worth is, who they do business with and what their financial needs are. However, most bankers will admit that this data is under utilized when it comes to building a trusted, value-added relationship with consumers.

This infographic presents data on how consumers interact with their financial institutions and what they want and expect when it comes to these interactions. It is imperative that banks and credit unions begin to develop a strategy for accessing and converting the data they hold about their customers and members to actionable information that can be used to personalize products and services.

To build a successful strategy for leveraging customer data in their digital channels, financial institutions will need to replace the disparate, legacy systems they currently use to deliver their digital services. This need is currently driving a number of early replacement projects at banks such as Arvest and First Tennessee. These replacement efforts are the largest of their kind in the industry in more than a decade and they are being completed by emerging technology providers that offer modern tech stacks that are highly configurable, scalable, secure and proven.

Editors Note: In part 2 of the blog series, we discuss quantum physics, predictive algorithms, and legacy systems. Retailers have been offering personalized experiences to their consumers for quite some time. Banks and Credit Unions, are seemingly far behind and most don't appear ready to move at a rapid pace. However, if these financial institutions want to provde the experience their consumers are demanding, a shift in mindset needs to take place.

Editor’s Note: The following is the third and final installment in a series of blogs excerpted from a report published by Celent entitled Defining A Digital Financial Institution by Daniel Latimore and Zilvinas Bareisis . D3 Banking has licensed the content for general distribution. For the full report contact Celent. The previous installment in this series dealt with legacy systems and organizational culture as the two biggest impediments to banks improving their digital sophistication.

Editor’s Note: The following is part one in a series of blogs excerpted from a report published by Celent entitled Defining A Digital Financial Institution by Daniel Latimore and Zilvinas Bareisis . D3 Banking has licensed the content used for general distribution. For the full report contact Celent.

Today, customers have a number of options of when and how they communicate their banking needs. However, one thing is certain - they want to do business with financial institutions that make their experience easy, convenient and simple. A customer’s first impression of a financial institution is extremely important and with planning, the digital revolution is making onboarding more easy, convenient and simple.

No one disputes that branch traffic is down and digital use is up at financial institutions. However, there is much debate over the conclusion that such a trend means that branchless banking is just around the corner. To some, the argument for keeping branches open seems to be backward facing, to a time long gone when most consumers had to make a personal visit to their financial institution to make deposits, open accounts and send money. Why hang onto branches when all those services and more can be completed on digital devices? To others, the inability of banks and credit unions to personalize the end user’s digital experience makes them hesitant to close the branches where they still do the bulk of their selling.

The influence of digital access points on the decision by consumers to switch financial institutions continues to grow in importance. It makes a “business as usual” approach the most significant risk an institution can take in responding to the digital needs of customers. According to the Accenture 2014 North American Consumer Digital Banking survey, more than one in four customers would likely consider a branchless digital bank. In addition, nearly three-quarters of US customers—two-thirds in Canada—consider their banking relationship “merely transactional.”

An IBM report analyzing 2014 holiday spending shows the distinction and complementary nature of digital devices. Smartphones drove 31 percent of total online traffic, nearly two and a half times that of tablets. While smartphones drove the traffic, more purchases were completed on tablets. Tablet accounted for 13 percent of online sales, whereas smartphones only accounted for 9 percent of total online sales.

In the last 270° View installment, we discussed how remarkably things have changed since the Stanford Federal Credit Union became the first financial institution to offer online banking. As noted in that blog posting, these changes have not necessarily been for the better in all cases.